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The Cloud War is Just Heating Up

Written by Monica Savaglia
Posted August 1, 2017 at 4:08PM

Everyone is talking about the cloud. It seems like you can’t go through a day without hearing the term or being prompted to save something on the cloud.

The cloud has become an easier and more efficient way to store and manage our data. Instead of using up space or memory on our devices, we are now able to store it via the internet.

Every day the cloud and the technologies involved with it continue to gain momentum, assisting the largest data centers and preventing even the smallest businesses from having to maintain the cloud’s infrastructure and software all on their own.

There are private and public platforms. A public cloud has its applications and storage available to the general public over the internet, which is usually either free or on a pay-per-use model.

Gartner predicts the worldwide public cloud services market will grow 18% in 2017 to $246.8 billion, up from $209.2 billion in 2016.

A private cloud is similar to the public cloud in what it provides, but its services are dedicated to one organization rather than multiple.

According to International Data Corporation (IDC), total spending worldwide on IT infrastructure products for deployment in cloud environments will increase 15.5% year-over-year in 2017 to $41.7 billion.

Some of the current market leaders in the cloud realm include Amazon (NASDAQ: AMZN) and Microsoft (NASDAQ: MSFT). Both of these companies are fighting for the lead, and for good reason.

Amazon and the Cloud

Amazon has been a leader in cloud computing since its cloud infrastructure launched 10 years ago. It was one of the very first companies to move into cloud services, so naturally it has had a lot of time and to move forward when no one else was interested. 

Amazon Web Services (AWS) hit $4.1 billion in revenue in its second quarter of 2017 — 11% of Amazon’s overall revenue.

Dave Bartoletti, a principal analyst at Forrester Research, said, “AWS invented this market... they had a five-year head start before anyone else got their act together.”

But just because Amazon was the first one to take the leap into this space doesn’t mean it will always have the lead. Amazon shouldn't get too comfortable because we're seeing more and more companies developing ways to improve on cloud services and solutions.

Microsoft and the Cloud

Microsoft has shifted away from its main focus of computer software and has emerged into the world of cloud computing, and it’s already benefiting the company.

Microsoft launched Azure, a platform-as-a-service (PaaS), to help developers easily create their apps. The company already has contracts with a lot of big customers, which means bringing attention to Azure and providing incentives to use the platform will help grow Microsoft into a cloud-computing leader.

You can obviously see this when you take a look at the growth of Microsoft Azure in that past three quarters — it’s grown at least 100%.

Microsoft has a new product line called “Azure Stack.” This new product allows companies to install a version of Azure in their own data centers.

Ed Anderson, an analyst who covers cloud services at Gartner, has called Azure Stack a potential “game changer.”

Cloud computing is driving Microsoft’s revenue growth, and this shift of focus is going to bring some competition for Amazon.

Cloud Computing & Services

Cloud computing aims to give enterprises easy and fast access to their applications, as well as with improved manageability and reduced maintenance from information technology (IT) teams. It allows businesses to save money by avoiding upfront infrastructure costs like purchasing servers.

There are two cloud computing platforms I want to discuss with you: platform as a service (PaaS) and software as a service (SaaS)

Platform as a Service (PaaS)

This platform gives application developers the environment to develop. Application developers can run their software solutions on the cloud without the cost and hassle of buying and maintaining hardware and software.

PaaS adoption is predicted to be the fastest-growing sector of cloud platforms, according to KPMG, growing from 32% adoption in 2017 to 56% in 2020.

Software as a Service (SaaS)

Users have access to application software and databases —  basically, the cloud providers install and operate application software in the cloud, and then users are given access to the software from cloud clients.

It’s usually priced on a pay-per-use basis or a subscription fee.

SaaS is the primary cloud computing type it is expected to capture two-thirds of public cloud spending in 2017.

MuleSoft (NYSE: MULE) is a software company headquartered in San Francisco, California. It develops its software platform Mule ESB, which connects enterprise applications on premises and to the cloud. This platform has been designed to eliminate the dependency on point-to-point integration code.

MuleSoft IPO’d in March 17, 2017, with an IPO price of $17. It opened today with a share price of $21.58 — a 26.9% increase in seven months. Companies like MuleSoft are jumping from being private to publicly traded companies because this sector is finally getting the limelight, and companies want to reap the benefits of a space that has a lot of growth potential.

There continues to be demand for cloud platforms and services, and that demand is only going to increase as businesses realize how beneficial and cost effective it can be to adopt these services and solutions.

Intel Security surveyed professionals, including 1,400 senior technical professionals, for its annual security research. From the survey, Intel Security found that in 15 months, 80% of all IT budgets will be committed to cloud apps and solutions.

In the past, businesses were hesitant to move over to the cloud for security reasons; however, that might not be as much of an issue nowadays, as more businesses are beginning to trust the cloud.

A year ago, only 13% who were surveyed by Intel Security trusted public clouds. Now that’s up by 76%. In 2017, 23% of organizations trust public clouds to keep their data secure.

Maybe 23% doesn’t seem like a lot, but a 76% jump in just one year is significant. Not to mention, more companies are emerging and growing their own businesses to better provide security for the cloud.

Cloud services are heating up, and a variety of companies are trying to snag up a piece of the market share, especially when that means taking it away from Amazon.

Until next time,

Monica Savaglia
Wealth Daily


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